You May Not Want to Think About the Recession—But You Should.
"Economists are notoriously terrible at forecasting recessions, especially more than a few months in advance. In fact, it’s possible (though unlikely) that a recession has already begun, and we just don’t know it yet." , Ben Casselman, NY Times, July 28, 2019. And recently, “Is a US recession coming?” and “Global Bond Market Sounds Shrillest Alarm Yet Over the Economy.” and “All the reasons to fret about the global economy, in charts”
Yes, the Recession is lurking under the surface of what appears to be a continuing booming economy. This isn’t a popular topic but Please bear with me.
On a recent episode of The McKinsey Podcast, “Preparing for and managing through a downturn," guest Sven Smit commented on the aspect of timing:
"But I would say you should be very careful about making a prediction. Of course, you should listen to all the different pathways by which people are saying something might happen, because that ups your readiness. And yes, you could say it’s been a long time. So winter will come, and after that, summer will come again. But when winter will come is deeply unpredictable."
Smit goes on to mention the fact that in the history of the world’s economy, no one has ever been able to predict the start of a recession. So what does that mean for you? Why should you be thinking about, and even planning for, something that is fundamentally unpredictable? The answer is simple—because being ready for the downturn will minimize its impact on your business.
Here's the thing. For some business owners, the Great Recession of 2008 actually led to a positive outcome. They not only weathered the storm, they went on to experience growth well beyond the recovery period. What was different about this small group of kick-ass, recession-buster business owners? Humility.
These business owners were humbled by the recession. They swore that they would never go through the miserable and frightening experience again. They thought, “I can't stop the recession but I can do something to ensure we minimize its impact. I can be prepared for a time when customers and prospects may consider alternatives.” They recognized that the first step was a complete reboot of how they think about their business and customers. In doing this, they were able to convert a potentially career-ending catastrophe into a powerful engine of growth.
During a recession, when customers focus mainly on price, their selection process highlights which businesses are perceived merely as commodities and which ones are truly unique. When customers are not emotionally engaged with the benefit your business provides, loyalty disappears and the lowest bidder always wins.
So it is actually now, in a booming economy, when it is most critical to look inward and answer the tough question, “Why should my customers buy from me?” When sales are strong it is easy to miss the fact that customer loyalty is not a given—it must be continuously earned.
"What can we do better and different (than our competitors) tomorrow?" is a sobering question. It cuts straight to the heart of doing business in the 21st-century, when your top competitor could be operating out of a WiFi-enabled porta potty in the middle of the desert.
Wieden & Kennedy, one of the most successful creative agencies in the world, built their "Walk In Stupid Every Morning" culture upon the recognition that a successful business must constantly challenge itself to grow. Dan Wieden adds to the pot a critical understanding that it’s not just growth at stake, but survival:
"When you don’t know, you try desperately to find out. But the minute you think you know, the minute you go – oh, yeah, we’ve been here before, no sense reinventing the wheel – you stop learning, stop questioning, and start believing in your own wisdom, you’re dead. You’re not stupid anymore, you are f*****g dead."
If you read, listen, and watch, you know that economists have been warning us of cracks in the booming economy for some time now. The experts say that the global economy is already at a downturn trend and the rate of loan/credit card defaults in the US is increasing. The general consensus is that 2020 will be a turnover year. So what should you do?
To weather the impending storm, you must re-evaluate your company's marketing. Fast forward to a time when consumer resources will be strained, when decisions will be made based on price, and when every competitor is going to fight like hell to get a piece of the shrinking pie. The process won't work unless you "walk in stupid" and embrace the out-of-body experience—viewing your business from a customer’s perspective, not yours.
Here’s a short action list, six tough questions to get you going:
What business are we in? Hint: If you're an airline, you're not in the travel, flying or customer service business. You're in the travel experience business. This is where you carefully define your "niche" or specialty area.
Why should customers buy from us? Hint: Your answer can't be similar to your competitors'. "We give great service," "We have the best price," "We stand behind our products," etc., won’t cut it.
Who is our ideal customer(s)? Do you really know everything there is to know about your customers? Hint: Think like an FBI profiler and sketch each customer ‘type’ (what us marketers call 'persona').
Does your marketing suffer from the "me, me, me" syndrome? Look at your website, social media pages and everywhere else someone can be engaged with your 'brand'. Is your marketing all about you instead of your customers? Hint: No one cares—or actually believes you—when you say, "We are the leading...". Customers care about your ability to connect with the problem they are looking to resolve!
Am I getting measurable results from each item on my marketing expense report? Before you answer the question, make a list of all your marketing expenses, and I mean everything. Look through your checking and credit card statements to find those recurring, forgotten charges—like the SEO (search engine optimization) company that promised you page-one placement on Google searches for only $400/month. Hint: Measurable results are not "likes." Results are quantifiable proof that your prospect took action in order to connect with your business, from submitting a form to actually buying.
Do you have a written Marketing Plan for your business? Every pilot, regardless of their experience, must file a flight plan before taking off. Surgeons must follow a detailed checklist to prevent infections. Running a successful business is no exception. Do you have a clear road map for your business?
Just like winter, the recession is coming. Now is the time to up your readiness and strengthen the foundation that your business is resting upon. Your survival could depend on it.
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